Sanlam reports triple digit jump in half-year earnings

South Africa's largest life insurance business, Sanlam, has reported a triple-digit growth in profit, with headline earnings per share increasing by 118 percent. Despite the challenging economic climate, Sanlam's CEO, Paul Hanratty, attributes the resilient performance to tapping into new opportunities and enhancing client retention. The company's retail new business flows have increased by 10 percent, with overall new business up by 19 percent. Hanratty explains that while there are pressures on middle and lower-income customers due to inflation and higher rates, there is still demand for insurance products and services from those with money to invest. The COVID-19 pandemic led to an increase in savings rates, benefiting Sanlam's business in 2021 and 2022. However, there has been a decline in life insurance net client cash flows by 46 percent as consumers dip into savings to survive tough economic conditions. Hanratty hopes for an easing in the environment going forward, emphasizing the importance of reaching the peak of inflation and interest rates. In terms of risk coverage, Sanlam focuses on educating clients about financial risks and the importance of securing their futures. The pandemic has heightened awareness among people about the fragility of the world, leading to a more serious approach to financial planning. Sanlam's recent partnership with Allianz, the German insurer, across 27 markets in Africa is seen as a strategic move to improve revenue streams for the business. By covering 27 countries and 16% market share in the insurance industry across the continent, the partnership aims to bring high-quality insurance products to Africa. The long-term potential of the partnership is focused on building customer confidence through integrity and trusted solutions. While the short-term benefits include cost synergies, Hanratty emphasizes the partnership's focus on the long-term growth prospects of the African continent. With a demographic advantage and potential for performance over the next 20 to 30 years, Sanlam and Allianz are poised to establish a strong presence in the African insurance market. The possibility of Allianz acquiring an equity stake in Sanlam remains uncertain, but the strategic partnership sets the stage for future collaboration and expansion across the continent. Overall, the alliance between two industry giants signals a significant move towards enhancing insurance accessibility and quality in Africa.